Late Payment Interest Project

On 17 March 2018, the Premier issued instructions to agencies regarding the payment of government bills on time. The objective of the Government’s commitment is to ensure that all undisputed invoices are paid within the standard 30 day payment terms.

The commitment has two major components:

Requiring monthly reporting by public authorities of their accounts payment performance to responsible Ministers, including the public release of this data; and

Amending the Late Payment of Government Debts (Interest) Act 2013 to expand the scope and automate the payment of interest to business on overdue invoices.

The changes to public authority payment performance reporting have already been implemented through amending the requirements set out in Treasurer’s Instruction 11 (effective 1 June 2018).

To implement the second part of the Government’s commitment, a draft Bill has been tabled in Parliament. In summary the Bill:

Expands the scope of the Act to cover all businesses trading with the Government, rather than just small business

Reduces the interest payment threshold amount from $20 to $10

Limits application of the Act to invoices with a value of $1 million or less; and

Automates the payment of interest to business such that it occurs within 48 hours of when an overdue invoice is paid.

A Steering Committee has been established, to guide and inform the implementation of the policy, which includes a number of key agency representatives.

Shared Services SA has already completed design work to automate the payment of interest in Masterpiece and testing has commenced. Design work has also been completed by the Department for Health and Wellbeing regarding the changes required to its finance system, Oracle.

Based on the work undertaken to date, it is expected that implementation activities will be completed by 31 October 2018. The date for the new legislation to take effect will depend on the timeframes for the Bill to be passed through Parliament.

A Change Management Plan is currently being finalised which incorporates communication with agency staff and financial delegates regarding the legislation and approaches that can be taken to minimise the number of invoices paid outside the Government’s standard 30 days terms.